Title: Central Wage Setting under Multiple Technological Equilibria: A Mechanism for Equilibrium Elimination
Abstract: Instituting an initial round of centralized wage setting before an ultimate round of decentralized wage bargaining may actually raise employment. A general multi-equilibrium model is set up with strategic complementarities in the implementation of a new technology through aggregate demand spillovers. In this model, centralized wage setting to establish an outside option wage, which is selectively binding on lo-tech firms, may achieve the big push to a hi-tech general equilibrium with higher employment, output, wages and profits.
Publication Year: 2003
Publication Date: 2003-05-06
Language: en
Type: article
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Cited By Count: 21
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